Court OKs Special Tax to Heal Cuts of Prop. 13

SAN FRANCISCO — The state Supreme Court eased the way Monday for municipalities to restore cutbacks in services resulting from Proposition 13, upholding a special tax approved by voters in San Marino to fund police and fire protection.

The justices unanimously rejected contentions that the San Marino tax--based on zoning classifications that are determined by property lot size--violated the 1978 initiative's prohibition against imposing special taxes based on property values.

The court said the initiative's provisions were limited to revenue derived from applying a "property tax rate" to the assessed value of property.

Flat Tax Rate

The San Marino ordinance, imposing a flat tax rate on all parcels within a residential zone, was permissible, the justices concluded.

"No appraisal of value is made," Justice Cruz Reynoso wrote for the court. "Parcels within a zone are taxed the same even if the actual value of the parcels differs."

The decision was quickly denounced by Paul Gann, co-sponsor with the late Howard Jarvis of the landmark property tax-cutting measure, as "unreasonable" and one that "discourages faith and confidence in our system of government."

Gann, recalling previous decisions by the justices limiting the scope of the initiative, added: "They've destroyed it, really. . . . This decision is just the frosting on the cake. To say that 13 doesn't apply here is an almost impossible conclusion."

Restoring Services

However, Howard J. Privett of Los Angeles, an attorney representing the City of San Marino, hailed the decision, saying it was an important ruling for municipalities searching for ways to restore services resulting from Proposition 13 cutbacks.

Privett pointed out that the tax had been approved by 80% of the voters in the upper-income San Gabriel Valley community of single-family homes.

"I'm sure many people there favored Proposition 13, but they also wanted to be free to charge for services to get the type of fire and police protection they want," he said.

Privett observed that several cities in the state had enacted special taxes based on zones--and that some have imposed a flat tax of equal amount on property owners regardless of the value of their property.

Approval Required

But such special measures require two-thirds voter approval and have encountered difficulty in obtaining passage.

Voters in Los Angeles, for example, last year rejected a proposal to increase the police force by 1,000 officers with a special tax based on the size of real property parcels and the buildings on those parcels.

San Marino's tax was adopted in 1983 after voters had previously turned down a measure imposing a flat tax on all property owners. Under the new measure, taxes were based on zones that in turn were determined by lot size. For example, in fiscal 1983-84 all lots from 12,000 to 15,000 square feet were taxed $268, while parcels from 22,500 to 100,000 square feet were taxed $588.

The measure was challenged by Philip R. Heckendorn, a San Marino attorney, as violating Proposition 13's prohibition against obtaining the required revenue through ad valorem taxes--those based on the value of property.

Heckendorn contended that there was a correlation between the size of a parcel and its value and that the fire and police tax was essentially ad valorem in nature.

The city won a dismissal of the challenge in Los Angeles Superior Court, but the state Court of Appeal reinstated Heckendorn's suit, saying he should be given a chance to prove there was such a correlation.

The justices, upholding the city's position Monday, said that prior to passage of the initiative the Legislature had defined ad valorem property taxation to mean "any source of revenue derived from applying a property tax rate to the assessed value of property."

Under that definition, the court said, San Marino's ordinance did not constitute an ad valorem tax. The justices noted also that the Legislature had enacted a law expressly authorizing special taxes for police and fire protection, and in doing so intended that such taxes could be levied on property distinct from the ad valorem prohibition.

"Here, approximately 80% of the voters of San Marino approved a tax levied for a specific purpose--to provide them with adequate police and fire protection," Reynoso wrote. "This vote fully complied with (Proposition 13's) super-majority (two-thirds) requirement and indicated the voters' willingness to be taxed for essential services affected by the reduction of revenue caused by (the initiative)."

The San Marino ordinance is due to expire next year and has been placed on the fall ballot for renewal. Supporters say it would raise up to $6.2 million over a four-year period.